What do you mean don’t pay a collection or a charge-off?

Why shouldn’t I pay for it? Here’s why.

Let’s use a bill, let’s use something that is the most common that most people see on their credit report.

What would you say that is?

Probably a hospital bill, maybe let’s use Verizon, okay.

Now Verizon collection charge-off. First, you have to understand what a collection and what a charge-off.

Collection is when you go 30, 60, 90, 120, it goes to collection.

A charge-off is when the company, the original company, we’re going to use Verizon in this example says, “You know what, at the end of the year, we are going to write-off the debt, okay.”

Now understand this, when I say understanding credit, you have to understand what I’m telling you here.

Verizon is the original creditor. At the end of the year, they do what they call charge-off.

And they charge-off the debt to a company with the highest bidder that says, “I will take that debt and buy it from you for pennies on the dollar.”

So let’s say that you owe Verizon 300 bucks, okay. Something like, we’ll call it ABC Collection Company picks up the debt for pennies for the total amount of debt, which is 300 bucks, which is probably going to be about four or five cents.

Let’s say five cents, so for $150 bucks, for $15, excuse me.

For $15, ABC says, “I’ll take the debt.”

Now here’s the kicker. Once it is in charge-off status, you have to know your legal rights, and here’s what I’m going to tell you.

Tell you exactly why you do not have to pay this.

ABC Collection is going to harass you and here’s what you don’t want to do.

ABC is going to call you every day.

Why?

Because they just paid $15 and if they can get you to at least pay $50, make you a deal and say, “Well, you’re going to come at about 50%.” So what happens is, ABC contacts you, calls you, calls you, calls you.

They’re going to send you some letters, they’re going to collect.

They only owe 15 bucks because that’s what they bought the debt for.

Now they’re going to harass you for probably half. They’re going to come to you and say, “Look, if you at least pay half the debt that you owe us of the 300, we’ll take 150.” Look what they just made.

They’re going to collect the 150, you think it’s a good deal because you’re getting it for half off the 300, and they only paid 15 bucks for it.

So understand that when it’s in charge-off status, they have no legal right to collect the money, and here’s why.

Did you sign the document with ABC Collection?

Did you sign any document with ABC Collection?

No, so they have no legal right to collect the money. Now they’re going to try, and here’s what I’m going to give you, as far as a tip.

Never answer the phone when it’s a collection company because here’s what going to happen.

They are really trained to keep you on a recorded line for 30 seconds, and during that 30 seconds, this is where you’re going to shoot yourself in the foot and be dead in the water.

They’re going to ask you, “Are you, John Smith? Is this your name?” When you admit to your name, they know they got the right person with the phone number they just called, admitting on a recorded line that you are that person.

Now is this the address? “Is this a current address?” You say, “Yes,” you’re toast.

They are trained to keep you on the phone for a minimum of 30 seconds to ask you two very important things, your address, and your name.

And if you can admit to those two things, then what’s going to happen, is they’re going to send you, and they have no legal right to collect on that because you now just basically verified who you are and where you live.

So remember this tip, if you pick up the phone and someone states, “That this is ABC Collection Company calling on behalf of so-and-so,” hang up the phone.

Do not give them any information, okay. They’re going to try to call you and they’re going to try to send you a letter.

Remember, that if they send you a letter, do not respond back to the letter, and on the phone, make sure you hang up in under 30 seconds.

The minute they say they’re a collection company, hang up the phone because then they got you.

You never have to pay a charge-off legally, unless you, by accident did not know not to verify it, that’s why I come to you every day.

To make sure that you guys, when it’s time to make a credit decision, doesn’t necessarily mean just a credit decision like, “Oh, what do I do for a credit card?”

Okay, the credit decision may be just as simple as saying, “You know what, what do I do when somebody calls me?”

That’s why I come to you guys.

You know I’m going to bring the real. Don’t pick up the phone, don’t validate any information by phone or by letter, okay.

Now here’s the kicker.

Let’s say you do want to pay a collection or a charge-off, okay. It’s okay.

Either way, you’re going to be in a bad place because if you pay it, now you’ve got a paid collection.

If you don’t pay it, you still have a collection, okay.

So what is the solution? Here’s the tip.

In order to get that removed, you have two choices. Number one, you can hire a professional credit repair company to remove it for you legally.

Number two, you can do what they call to pay in lieu of deletion.

And a lot of the creditors and credit company will allow you to do what they call to pay in lieu of deletion.

If you guys want to know what that is, here’s a little tip.

What that means is, if you’re talking to the collection company and you can get them to agree to send you a letter stating that if you make the payment, whatever that payment amount is, whatever you guys agree on, send me a letter stating that if I pay, you will remove it from the credit bureaus.

Now remember this, they can put it on as a collection and they can remove it, they have the systems, okay.

They have the talker, they have the ability, they have the systems and the capability to be able to report data.

So check this out, okay.

Now you want to get it removed.

You say, “I’m not going to pay anything until I get a letter from your company stating that if I make the payment today, that you will remove it from all three credit bureaus.” They will send you a letter.

Not all companies do this, but the majority of them will. And in a case like that, they have to remove it legally because now you’ve got a complete legal document from a company stating paying in lieu of deletion, okay.

So and this is a huge misconception, guys. You have to understand this, oh, my gosh.

People think that if they have late payments that, “Okay, I’ve got one, two, three, four late payments, okay.

And then all at once, maybe I was going through a job switch, whatever, I didn’t have the money.

And then I’ve made three payments, and then I missed a payment, but then I caught up and I’ve made other payments that that late payment did not negatively affect him because now they’re caught up.”

Couldn’t be further from the truth. Okay. Same thing with collection charge-offs.

You think that “Oh, I got a paid collection. I paid it off. It’s not a collection anymore.”

Wrong. It’s still a collection.

Now you’ve got a paid collection on your credit.

So now it looks like you didn’t make the payment for 120 days, but then you came into money and you said, “You know what, I want to be a good citizen, and I want to pay off my collection.”

But now, guys, you got a paid collection on your credit report. It looks really bad, have professionals remove it for you or try to do pay in deletion, but never, ever, ever pay it yourself without those items, and don’t stay on the phone for 30 seconds or more validating your name and address.

If you guys have comments, post them below, give me a thumbs up.

I’m trying to bring the most data and education to you guys every single day so you know exactly what to do and when to do it.

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